I am an essayist specializing in the Bahá'í Principles. Essays come out every day or so. Contact me at: badijet@gmail.com

Thursday, October 22, 2009

Terras or Locas?

Three New Types of Currency

By John Taylor; 2009 Oct 22, Ilm 08, 166 BE

I have been looking for a precedent for the new types of money that I have been contemplating for the UCS, Universal Civic Society -- that is, the world after the concurrent formation of continental, global, familial and neighbourhood governments. Here is what I learned after wading through several Wikipedia articles on currency, including "alternative currency", "complementary currency," "fiat currency," and "private currency."

There is a startling variety of types of currency. Some are well established, some remain experimental and others are only proposed. The most common currency in actual use is fiat currency, the national government-imposed money that most people use most of the time. These are universal largely because governments back them up and demand that taxes be paid in this type of currency. There are, however, alternatives to fiat species. Many types of local or private schemes have been tried with varying success, some based on barter and others on commodities, like gold or silver. Many are local currencies that can only be spent in a certain place, and others are limited to a single company or industry (scrip, coupons or air miles).

Among the most interesting experiments in local currency took place in response to the hyper-inflation that afflicted Germanic countries after the First World War. They had various names, including the Schwundgeld. This local currency started with a private company and ended up as a project by urban governments. This local currency had a "best-before-date," which is to say that Schwundgelds devalued gradually; after a certain deadline they expired and were useless. Termed demurrage, or negative interest, this encouraged fast and furious spending in local stores and other enterprises. This shot of adrenaline was a strong but temporary stimulus to the economy. Some environmentalists, including the Green Party and George Monbiot, argue that demurrage, by discouraging cash holdings, encourages investment in long term resources, like forests, fisheries, and so forth.

Many other currencies have been speculated upon by futurists and science fiction writers based on units of energy, time, labour, carbon, etc. The Star Trek universe, at least in its early incarnations, contemplated a future society without need of money at all. Indeed, the nature of money would change as soon as a standard income covering basic needs is introduced. With a modicum of food, clothing and shelter guaranteed as fundamental rights, the threat of starvation and homelessness would not loom over economic relations; naked profit might not exert the addictive fascination that it does now. Other values and virtues would enter the economic equation if work and purchases were done more out of inherent interest rather than brute survival. Just as government-owned corporations are not necessarily restricted to brute profit as motivators, standard incomes would allow other financial agents to take on new spiritual, scientific and legal motivations.

The question remains, however: what kind of currency is the best? When a democratic world government comes about, should it retain unchanged the present monetary system run by national governments? Or should it encourage entire continents to take on their own currencies, as has already been done in Europe with the euro? Should there be an "afro," an "americo," and an "asio" as well? Or should the world authority establish right away its own fiat currency to replace the hundreds of currencies, fiat or otherwise, in use around the world?

A name has even been suggested for this world currency, the "terra," analogous to the EC's "euro." So, under a world government will every exchange of funds be in terras, or will the terra be restricted to travellers and diplomats while most transactions are done using various forms of local currency? What should we call them, since presumably every locality would have a different name for its currency. Collectively we could call the myriad local currencies "locas." So the question is, in a UCS should we pay our taxes and everything else in terras and keep locas as adjuncts, or should the loca be the main currency in use, with terras reserved for exceptional cases, such as intercontinental tourism?

I cannot begin to try to answer these questions. I expect that specialists using computer simulations could determine what currency or combination of currencies would be most economically viable on a regional or international basis. There seems to be a consensus of opinion that locas do offer a measure of security against hyper-inflation (whether that would be a problem in a cosmopolitan order I have no idea) and against over-investment in environmentally unfriendly enterprises, and that demurrage and Tobin taxes on currency exchange could be effective protections against hyper-inflation and overly heated speculation. But beyond that, not much is accessible to the non-economist.

Undaunted, I have an idea for three new kinds currency that, as far as I can see, has never been tried. To recap: In this series of essays on the Badi' Blog (badiblog@blogspot.com) I have been exploring the idea of a three-chambered world government based on education, politics and religion. Since, as we have seen, these three already have their own elections and taxation, the question I am now interested in is: should each of the three branches print their own money as well? That is what I will try to answer over the next several installments in this series.